NY Times looks at entertainment websites

For those who are not subscribers to the NY Times online, I thought this might be of some interest:

Digital Wave Arrives in HollywoodBy TRACY KERIEVSKY

In the days before the digital entertainment craze in Hollywood, people would approach Kevin Wendle in restaurants with movie scripts. "Now, they hand me business plans for start-ups," said Wendle, an Emmy-award-winning television and film producer, cofounder of E! Online and Fox Broadcasting, and now chief executive of the start-up iFilm.

The entertainment industry may have been wary of the Internet over the last few years, but the digital entertainment boom in Los Angeles is suddenly underway. Hollywood heavyweights like the producer Jerry Bruckheimer, the director Oliver Stone, and Brad Grey, the executive producer of "The Sopranos," are producing live action and animation for the Internet. In addition, some senior level executives are leaving the traditional studios for start-ups.

"Just in the last six months, people are recognizing that the Internet finally has the technology and the audience to deliver interesting entertainment," said Joe DiNunzio, once an executive at Walt Disney Imagineering and now chief executive of Z.com, a new online entertainment studio whose first show chronicles the Red Hot Chili Peppers on tour.

About 100 new digital entertainment companies have formed in Los Angeles over the past six months, according to Tony Winders of the Digital Coast Roundtable, a consortium of local new media business leaders. The Digital Coast Roundtable is now conducting a study that will produce the first demographics for this new economy.

Rohit Shukla, a Digital Coast Roundtable member and chairman of the study committee, said, "The study indicates that in the last year alone, the dot-com universe here has grown by 3,000 percent."

Last July, the Milken Institute ranked Los Angeles third, in its "top 10 tech poles" report, behind San Jose and Dallas. Southern California now has almost twice as many jobs in new media as the Bay Area, according to the Bay Area Economic Forum, an alliance of 39 business, government, and academic leaders in San Francisco and Silicon Valley.

These statistics have made Los Angeles the online entertainment capital of the world, say industry insiders like Rand Bleimeister, chief executive of Firstlook.com, a new site that lets users sample the latest releases of major musical acts.

The growth in the industry has already had a trickle-down effect. A surge of new clients involved in entertainment content has been keeping the leading real estate firm for Internet companies in Los Angeles extremely busy in the last six months. "Just a couple of years ago, it had to be San Francisco or New York," said Matthew Miller, founding principle of the CRESA real estate firm. "But now, the technology industry realizes the importance of Los Angeles."

As the digital entertainment scene has expanded over the last year, about 1,200 business plans have come into circulation, according to Mariana Danilovic, chief executive of the Digital Media Incubator, which has developed business models for new entertainment start-ups like Tonos. Founded by the Grammy-winning musician Kenny (Babyface) Edmonds, Tonos is a site for aspiring musicians where, for example, users may have the chance to ask Burt Bacharach about his creative process.

Another measure of the industry's growth is the infusion of venture capital. In recent years, just a handful of companies have been financed locally. "In the last 12 months, so much venture capital has come to the area that start-ups actually have more than they need and can pick and choose," Miller said.

As a result of all this activity, there are suddenly lots of new ways for users to entertain themselves online. Among the new offerings are iFilm, where users can choose from over 800 films and watch at their leisure; Firstlook.com, where they can hear brand-new music from major artists; and DEN, where they can watch original shows on their coffee breaks.

Not long ago, the best in the business held back from this new medium, but that has changed as webcasts have become more clear and fluid.

"They've been waiting in frustration on the technology. They didn't want to do bad stuff, and they said live action looked terrible online," said Steve Stanford, chief executive of Icebox. Though the founders of Icebox had a business plan in 1998, they say that have been waiting until now for technology that can deliver quality entertainment. "Now we have the bandwidth and the willingness of the audience, and everybody from top to bottom in the industry wants to try new concepts on the Internet," Stanford said.

For the first time, start-ups have the investment capital to hire top talent. So people like Stone, Bruckheimer and Grey are now creating original shows and shorts for Z.com. Icebox has original animation from the creators of "The X Files" and "South Park the Movie." And Atomic Pop, a year-old Santa Monica music label, has signed major acts like Ice T and Public Enemy.

In the last year, even the traditional studios are trying new things online. Dreamworks' heavily promoted POP.com, set to launch this spring, will produce and broadcast Internet-only, streaming video shorts with an emphasis on comedy.

But despite such new online initiatives, traditional studios are experiencing a talent exodus. People see digital entertainment startups as a way to make a quick fortune through sweat equity, to try unconventional creative concepts, and to break free of the old Hollywood power structure.

Those migrating from big studios find "a totally different structure and attitude toward work," said Matt Jacobson, chief executive of Broadband Interactive Group, which develops entertainment channels like Bluetorch, where viewers can watch extreme sports stunts on television or the Internet.

When DiNunzio left Disney for Z.com, he gave up perks like limousines, first-class travel and a private office -- all to work in a giant warehouse. But he says he prefers the new free atmosphere, where, he said, "there are no physical barriers, it's easier to blend people, and everybody is an owner."

Serina Mayer left the traditional music industry because she found it too formulaic and became managing director of Atomic Pop. "In this environment, people don't perceive barriers," Mayer said. "They feel like they can make anything happen."

With a 3,000 percent growth of the digital entertainment scene this year, a lot of people in Los Angeles seem to be feeling this way.